TMI, Inc. v. Maxwell, H-02-CV-494 (S.D. Tex. 2000), rev'd, 368 F.3d 433, 70 U.S.P.Q.2d (BNA) 1630 (5th Cir. 2004) (full-text).
Factual Background Edit
Plaintiff sold houses under the name TrendMaker Homes and operated a website at "trendmakerhomes.com." Defendant intended to buy a house from plaintiff, but he became dissatisfied with the homes he was shown and the salesperson's misrepresentations about the availability of a certain model. Because of his bad experience with plaintiff, defendant registered and used the domain name "trendmakerhome.com" to tell his story. The site contained a disclaimer at the top of the page indicating it was not plaintiff's website. It also contained a section called the "Treasure Chest," which defendant envisioned as a place where readers could share information about contractors and tradespeople, but this section contained the name of only one person who had done work for defendant and defendant posted that listing on his own. The site did not have any paid advertisements or links to any other sites.
After a year passed, defendant removed the site and let the domain name registration expire. Shortly thereafter, plaintiff sent defendant a cease and desist letter demanding that defendant remove the site and transfer the "trendmakerhome.com" domain name. In response, defendant attempted to re-register the domain name but plaintiff had already registered it. Defendant then registered "trendmakerhome.info" but never posted any content at the site.
Trial Court Proceedings Edit
Plaintiff sued defendant for cybersquatting and for dilution under the Texas Anti-dilution statute and the Lanham Act. The parties immediately began settlement negotiations through their respective lawyers but defendant backed out of a settlement and proceeded pro se after he researched the issues.
Following a bench trial, the district court held for plaintiff on all claims. The court enjoined defendant "from using names, marks, and domain names similar to" ten of plaintiff's marks, including TREND MAKER, and ordered defendant to transfer "trendmakerhome.info" to plaintiff. The court also ordered plaintiff to submit a proposed judgment and gave defendant ten days to respond to plaintiff's proposal. Without allowing defendant the ten days to respond, the court signed plaintiff's proposed judgment, which expanded the court's conclusions and orders by including findings on claims not even pled by plaintiff and by expanding the injunction to add three marks. Plaintiff's judgment also included statutory damages of $40,000, and attorney's fees of $40,000 without explaining why the case was "exceptional."
Appellate Court Proceedings Edit
On appeal, the Fifth Circuit reversed the district court's decision and rendered judgment in favor of defendant. The Fifth Circuit examined whether the FTDA and the ACPA required commercial use for liability. The appeals court decided that FTDA claims must involve commercial use to be actionable but declined to decide whether ACPA covers only commercial use based on its finding that defendant's website was not commercial in nature.
It rejected plaintiff's argument that the "Treasure Chest" portion of defendant's site was commercial because: (1) defendant never accepted payment for a listing on the Treasure Chest, (2) defendant did not charge money to view the site and there was no evidence that defendant had an intent to do so, (3) the site did not contain advertising or links to other websites, (4) defendant was not in the business of selling domain names, and (5) plaintiff presented no evidence of any business purpose for the site. Because defendant's site was noncommercial, the Fifth Circuit reversed the district court's finding that defendant violated the FTDA.
The court of appeals next reversed the district court's decision regarding cybersquatting, finding that plaintiff failed to prove that defendant acted with a bad-faith intent to profit from the domain name and website. The Fifth Circuit noted that the district court based its bad-faith finding mainly on defendant's behavior during settlement negotiations and did not explain how the nine enumerated ACPA bad-faith factors applied to the case. After analyzing these bad-faith factors, the appeals court held that plaintiff failed to establish a bad-faith intent to profit from the domain name. In particular: (1) defendant used the mark in a noncommercial manner, (2) plaintiff did not establish that defendant intended to divert customers from plaintiff's site, (3) defendant never offered to sell the domain name, and (4) defendant's registration of a second domain name did not weigh towards bad faith because he registered it for the same purpose as trendmakerhome.com and only after his first registration expired.
Finally, the Fifth Circuit also reversed the district court's decision on the Texas dilution claim, stating that the Texas law was not designed to "address non-trademark uses of a name to comment on, criticize, ridicule, parody, or disparage the goods or business of the name's owner" and that defendant's use fell under this exception.
- This page uses content from Finnegan's Internet Trademark Case Summaries. This entry is available under the Creative Commons Attribution-Share Alike License 3.0 (Unported) (CC-BY-SA).